Oil hits nearly four-year high as Hormuz stays shut with blockade to continue

OIL extended gains as the Iran war showed little sign of nearing a resolution, prolonging the near-closure of the crucial Strait of Hormuz that has sent shockwaves through global markets.

West Texas Intermediate rose as much as 2.6 per cent to US$109.64 a barrel on Thursday (Apr 30), climbing for a fourth day. Brent closed above US$118 in the previous session, the highest since June 2022. US President Donald Trump told Axios he will not lift a naval blockade of Iran’s ports until he secures a nuclear deal with Teheran, while Iranian officials have shown no signs of backing down.

The Strait of Hormuz has been effectively closed since the war started at the end of February, choking off flows of crude, natural gas and oil products, and driving up energy prices. On Tuesday, Trump discussed steps the US could take to prolong its blockade while minimising the impact on American consumers at a meeting with oil and trading executives, the White House said.

“The longer the strait is closed, the higher prices go,” said Dennis Kissler, senior vice-president for trading at BOK Financial Securities. “A longer term waiting game is a near term bullish catalyst for crude prices, however it may be just the recipe needed to bring the conflict to an eventual end game.”

Iranian officials remain defiant. Mohsen Rezaee, military adviser to the Supreme Leader, vowed the nation will respond if the US blockade continues, according to state TV. Parliament Speaker Mohammad Bagher Ghalibaf accused Trump of seeking to force Teheran to surrender through economic pressure and internal divisions, Tasnim news agency reported.

Blockades of the Strait of Hormuz by the US and Iran has reduced daily transits to near zero. The International Energy Agency called the conflict in the Middle East the biggest supply shock in history, and Vitol Group says the market is facing a supply loss of around one billion barrels.

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Oil rises on reports US will extend Iran blockade, prolonging Middle East supply disruptions

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The US is seeking forfeiture of two Iran-linked tankers seized by naval forces enforcing the blockade, according to a senior White House official. Washington has turned away dozens of vessels since the start of the siege on Apr 13.

Confiscating oil cargoes aboard Iran-linked ships would represent an escalation of Trump’s economic offensive – and dovetail with Washington’s strategy towards Venezuelan crude after the ouster of President Nicolas Maduro.

US crude exports surged to a record last week as global buyers tap American producers for barrels to replace lost supply from the Middle East. Overseas shipments rose above six million barrels a day, eclipsing a previous high of nearly 5.3 million set in late 2023. BLOOMBERG